FX.co ★ Rupee Pauses Slide on Lower Oil, Fed Bets

The Indian rupee traded near 96.2 per dollar, stabilizing after hitting a two-month low, as softer oil prices and waning expectations of a US Federal Reserve rate hike this month offered some support. Crude prices declined amid rising exports from the Middle East and strategic stockpile releases by Group of Seven countries, easing supply concerns. At the same time, weaker-than-expected US jobs data cut the implied probability of a Fed hike to about 20%. Even so, the dollar held firm near a 17-month high, and elevated US Treasury yields continued to pressure the rupee. The Reserve Bank of India remained an active presence in the foreign exchange market, helping to curb the rupee’s slide, though the clear breach of the 96-per-dollar level has increased the risk of further depreciation. Meanwhile, markets are increasingly factoring in an RBI rate hike this week as inflationary pressures broaden, with consumer inflation at 4.82% in August and GDP growth running at 7.8% in the second quarter.